11.2 Joint Tenancy
For tenants by the entirety property, of course, the creditors of the debtor decedent spouse have no recourse against the property. This would have been true both during the lifetime of the debtor spouse (assuming it’s not a joint debt) or thereafter. If the debtor spouse, however, survives the non-debtor spouse, the assets generally become available to the creditor as a result of the instantaneous succession. [There is a potential exception if the surviving debtor spouse disclaims and as a result of such disclaimer the assets are directed by the deceased non-debtor spouse estate plan to a spendthrift trust for the surviving debtor spouse.] See generally Fred Franke, Asset Protection and Tenancy by the Entirety, 34 ACTEC J. 210, 219-21 (2009).
For other forms of joint tenancy, the property may also be free from the decedent’s creditors even after a judgment is entered against one of the joint owners. In the Eastern Shore Building and Loan Corp. v. Bank of Somerset, 253 Md. 525, 253 A.2d. 367 (1969) the Court of Appeals held that a judgment that constituted a lien on one owner’s interest in joint tenancy property did not survive a conveyance to a third party unless or until there is execution on the judgment before the conveyance. This is not an intuitive result because joint tenancies are “disfavored” in Maryland and many unilateral acts by one joint tenant operates to sever the tenancy, thereby converting it to a holding as tenant in common. Thus, for example, if one joint tenant executes a lease, executes a contract of sale, or takes other kinds of individual action, the tenancy is severed and the property “converts” to ownership in common. Nevertheless, the mere fact of a judgment against one joint tenant does not effectuate such a severance and conversion:
In the present case there was no execution by the judgment creditor prior to the conveyance by the joint tenants, nor was there any contract of sale or lease by one joint tenant or other action prior to the conveyance of October 5, 1967, by the joint tenants which might possibly result in a severance of the joint tenancy prior to the conveyance. That conveyance, it is true, terminated the joint tenancy, but simultaneously with the conveyance, title to the subject property vested in the grantees in fee simple. There was never a time, therefore, that Otho and William ever held title to the subject property as tenants in common so that there was no estate in the land which Otho, alone, held in severalty to which the lien of a judgment against him alone could attach. Inasmuch as the judgment is not against any of the grantees in the deed of October 5, the judgment lien obviously does not attach to any of their interests in the subject property.
Eastern Shore Building and Loan Corp. v. Bank of Somerset, 253 Md. 525, 253 A.2d. 367 (1969), at 531/370-1. Similarly, in Chambers v. Cardinal, 177 Md. App. 418, 935 A.2d. 502 (2007), the Court of Special Appeals held that a judgment lien that was not executed upon does not attach and therefore a purchaser of the property will held title to the property clear of such lien.
The holding in Eastern Shore Building & Loan Corp. is the common law rule: “At common law, a creditor’s rights to a debtor’s joint property were limited to the right to sever before the debtor joint tenant died…If the debtor owning an interest in joint tenancy died before the creditor sought to reach the debtor’s share, however, his interest was deemed to expire and the survivor held free of any claims against the decedent. This is still the prevailing rule.” Thomas R. Andrews, Creditors’ Rights Against Nonprobate Assets in Washington: Time for Reform, 65 Wash. L. Rev. 73, 92-3 (1990).